In the interview to EETimes’ Rick Merritt, Infineon’s CEO, Ziebart mentioned that semiconductor companies need to shift their focus from building fabs to building systems, and they must engage with customers at deep technical levels if they are to survive the current wave of consolidation.
“The major thing giving semiconductor makers a competitive advantage has evaporated. Today everyone has access to the same process technology at roughly the same time. This access used to be what differentiated the best from the worst semiconductor companies, but now it has evaporated, What’s replacing process technology as a differentiator is systems know how, and it must be specific to a market area”, he said.
This has initiated several comments on the blogosphere. Let me add my two penny’ worth to that:
In the past, the process technology was the competitive edge. Later the escalating costs (& risks) involved with building new fabs & developing new processes left one with little option but to pool in resources and consolidate (to compete with the rising prominence of original pure-play foundries); giving rise to alliance like Crolles and later the Common Platform Alliance. IDMs shared their resources for the basic process and individually derived some spin-offs for differentiation & niche. This competitive edge was further complemented and later more or less replaced with strong IP portfolio which has grown over the years from a block to platform to “platform plus services”.
Moving to system level is a natural progression in this path.
Yes, the differentiator has moved from process technology; but it is due to access to the process techno. This access has become cost prohibitive for any single semiconductor company (perhaps leaving aside a couple with really deep pockets) and hence the scramble to find an alternate place in the value chain to survive.
A point to be noted here is to follow how the foundries have also evolved over this period – from pure play to design support to building an IP portfolio to……. “systems know how”???